Toops Scoops: Murdoched!

In Great Britain, they called it "The News and Screws." Now that the media outlet truly is screwed, they're calling it toast.

In case you haven't been following the ongoing scandal at the Rupert Murdoch-owned News of the World tabloid, here's a quick recap—and yes, there is an insurance angle, because this is a tale of corporate accountability, cyber risk and a total disregard of risk management basics.

It all began when word leaked out about reporters at the 168-year-old tabloid trolling for stories by hacking into the private cell phones of celebrities, political figures, dead soldiers, terrorist victims--and a missing 13-year-old girl who turned out to have been murdered. That last little indiscretion pushed the incident way beyond a breach of journalistic ethics and cyber privacy violations into the realm of destroying evidence and tampering in an ongoing criminal investigation.

Obviously, this isn't the end of the saga. Over the last few days, Murdoch's attitude has shifted from defiance to humility as he's embarking on a public- relations-driven effort of apologizing to the family of the murdered girl and accepting the resignation of Rebekah Brooks, lead editor of the tabloid at the time of the hackings. Brooks was even arrested and freed on bail over the weekend.

Most recently, Sean Hoare, the News of the World reporter who was the whistle blower on the phone hacking story, was found dead on Monday, July 18.

But the nicemaking and backpedaling comes too late to salvage the News—and also scotches the deal Murdoch was trying to swing to purchase British Sky Broadcasting Group.

What does all this mean for insurance? All I can say is I'd hate to be the broker who placed the media liability insurance for News of the World.

And although the trail of guilt is a long way from clear, it's already obvious that the hacks are not the act of a few loose cannons on the News staff. If anything, the practice was known, if not condoned or even implemented by, the News' senior editorial staff. Again—I don't think there's enough D&O coverage in the world to mitigate any top-down decisions that might be at issue here.

Is spying on sources corporate policy at the Murdoch enterprise? How far up the food chain will the guilt be traced? Will the dirty doings at the News of the World taint other Murdoch holdings, including the venerable Wall Street Journal—where publisher Les Hinton just resigned? Stay tuned.

Back in 1984, Murdoch, in his earliest bids to become the King of All Media, bought the Chicago Sun-Times, in a move that caused much angst in the journalistic community. Legendary Chicago newsman Mike Royko, then a columnist for the paper, wrote, "No self-respecting fish would want to be wrapped in that kind of paper." He also observed of Murdoch, "His goal is not quality journalism. His goal is vast power for Rupert Murdoch, political power."

At a time when instant interconnection is a given, and the convergence of news and entertainment, the private sector and the government, is increasingly blurry, Royko has proven to have been more prescient than he would have ever dreamed.